IFC ADVISORY SERVICES | ACCESS TO FINANCE
IFC Mobile Money Study 2011
THAILAND
In Partnership with the Republic of Korea
IFC ADVISORY SERVICES | ACCESS TO FINANCE
IFC Mobile Money Study 2011
THAILAND
In Partnership with the Republic of Korea International Finance Corporation 2011. All rights reserved. 2121 Pennsylvania Avenue, N.W. Washington, DC 20433 Internet: www.ifc.org
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Foreword...... ix Appendixes Acknowledgments...... xi A. Fact Sheet and Demand Estimates...... 39 Abbreviations...... xiii B. Persons Interviewed...... 43 References...... 44 Summary...... 1 Box 1. Introduction...... 4 3.1 Bank of Thailand “Payment Systems Study Focus...... 4 Roadmap 2010”: Cash...... 12 Socioeconomic Country Context...... 4 Figures 2. Demand Perspective...... 6 2.1 Potential Monthly Transactions in Key Bill Payments...... 7 Mobile Money Market Segments in Person-to-Person Transfers...... 7 Thailand...... 6 Government-to-Person Payments...... 7 2.2 Means of Remittance Transfer Reported Informal Payroll ...... 8 by Domestic Migratory Workers from Public Transport ...... 8 Thailand and Sri Lanka...... 7 Business-to-Business Payments...... 8 3.1 Thailand’s Mobile Money Market in the Other...... 8 Porteous Regulatory Environment Model...10 3.2 Number and Growth of ATMs...... 15 3. Parameters of the Mobile Money 3.3 Growth in Internet Banking...... 15 Ecosystem...... 10 3.4 Uses of Internet Banking, 2008...... 15 Enabling Regulation...... 10 3.5 Self-Reported Rating of Ability to Use Existing Access to Financial Services...... 14 Various Financial Devices...... 16 Existing Mobile Access and Market Situation ...... 16 4.1 Socioeconomic Characteristics of Mobile Money Users and Nonusers ...... 20 4. User Survey Findings...... 19 4.2 Mobile Banking Service Provider...... 21 User Survey...... 19 4.3 Mobile Money Services Used...... 21 Agent Survey ...... 24 4.4 Mobile Phone Brand Used...... 21 4.5 Cash Withdrawal Sources Used Most 5. Business Models...... 30 Frequently...... 22 TrueMoney...... 30 4.6 Typical Cash Withdrawal Amounts...... 22 Advanced MPay...... 32 4.7 Travel Time to Nearest Bank or ATM...... 22 DTAC and K-Bank...... 33 4.8 Typical Methods of Money Transfer...... 23 4.9 Preferred Source of Information on Mobile 6. Conclusion...... 37 Banking Services...... 23
vii viii IFC Mobile Money Study 2011: Thailand
4.10 Level of Confidence in Banking Sector...... 23 Tables 4.11 Respondent Rankings of Benefits of S.1 Mobile Money Opportunities in Thailand....3 Mobile Banking...... 24 2.1 Potential Mobile Money Market Segments...6 4.12 Respondent Level of Interest in Various 3.1 Parameters Affecting the Success of Mobile Mobile Money Services...... 25 Money Services...... 11 4.13 Annual Sales of Respondent 3.2 ATM Interbank Fund Transfer Fees...... 13 Businesses (US$)...... 26 3.3 Relative Importance of Cash in Selected 4.14 Percentage of Staff Time Serving Mobile Asian Economies, 2004 (%)...... 14 Money Customers...... 26 3.4 Summary of Thailand’s Banking 4.15 Agents’ Views on Why Clients Choose Infrastructure...... 15 Mobile Money Services over Other 3.5 Growth in Credit, Debit, and ATM Cards. 16 Options...... 26 3.6 Average Monthly Credit, Debit, and ATM Card Payments/Withdrawals in B (US$)....16 4.16 Marketing Materials Provided to 3.7 Percentage Distribution of Mobile Phone Agents by Service Provider...... 27 Ownership by Household Socioeconomic 4.17 Training Agents Considered Most Useful....27 Status and Location...... 17 4.18 Revenue from Mobile Money as 4.1 Distribution of Surveyed Third-Party Percentage of Total Sales...... 27 Agents by Type of Business...... 25 4.19 Frequency of Compensation by Service 5.1 Business Models of Three Major Mobile Provider...... 28 Money Providers in Thailand...... 31 4.20 Required Minimum Deposit to Service 5.2 Growth in Mobile Banking...... 33 Provider Account...... 28 5.3 Detailed Business Model Comparison...... 35 4.21 Cash Float Requirements...... 28 A.1 Fact Sheet...... 39 4.22 Frequency of Trips to the Bank...... 29 A.2 Demand Estimates...... 41 Foreword
inancial inclusion—access to a range of Mobile technology is a channel that, once in financial services and products for every- place, allows for the delivery of other low-cost one needing them, in a fair, transparent, financial services bringing banking to unbanked Fand cost-effective manner—is a goal of IFC and underserved people. Mobile money—the (International Finance Corporation) and a prior- transfer of funds using cell phones—is an innova- ity of the Group of 20 development agenda. tive method for both individuals and small busi- nesses to transfer money. Mobile money is becom- IFC has committed to achieving greater financial ing common in developed countries for small, inclusion by 2013 by providing more diversified frequent payments such as mass transit fees. In financial services and by deepening outreach to some developing countries, it offers an opportu- microclients and small and medium enterprises. nity for unbanked people to pay bills and transfer IFC also helped support and shape the G20 global funds without using cash. Some businesses use it financial inclusion agenda that calls for the pro- throughout their supply chain. motion of a range of financial services beyond credit—including payments, savings, remittances, Why has the development of mobile money sys- and insurance. tems been so successful in some countries, yet seem blocked in others? What can be done to More than 2.7 billion people in developing coun- encourage its development globally? tries do not have access to basic formal financial services, such as savings and checking accounts. This report looks at the technology required and Many governments have made savings accounts the business models used by mobile network oper- widely available, but to make payments and trans- ators, banks, and others in four developing coun- fer funds, the poor must often depend on costly tries—Brazil, Nigeria, Sri Lanka, and Thailand. It and unreliable informal financial services. Low compares these countries with Kenya and Japan, levels of financial inclusion also represent an which have successfully developed mobile money obstacle to economic development. operations, and with the United States.
Developing innovative methods of retail payments Perhaps more importantly, it offers a framework is essential to increasing financial inclusion. New for a quick market study of a country to determine technologies and new business models are open- whether or what type of mobile money services ing new methods of retail payments, as well as bill might be developed commercially. It offers models payments and transfers of funds among people of user perception and demand surveys, then and businesses. develops a set of parameters—such as regulatory
ix x IFC Mobile Money Study 2011: Thailand
environments, current access to financial services, telecommunications equipment and handset and the requirements of potential mobile money manufacturers, and others that could be involved service providers to run viable businesses—that in the development of mobile money businesses. can spur or block mobile money development. By using these survey techniques and examining I would like to express sincere thanks to the gov- the relevant parameters, a government or develop- ernment of the Republic of Korea for its support ment agency can assess a country’s potential for a of this study through the Korean Trust Fund. successful mobile money business.
We hope this report will contribute to mobile money business development globally. It is Peer Stein intended for regulators, mobile network opera- Global Business Line Leader tors, commercial banks, microfinance institutions, IFC Advisory Services, Access to Finance Acknowledgments
his study was commissioned to increase Dialog in Sri Lanka, and TrueMoney in Thailand. understanding of mobile money (m-money) Other organizations, companies, and individuals and help address key issues in scaling up in each country gave generously of their time and further development of m-money ecosys- knowledge, including the Central Bank of Brazil, T the Central Bank of Nigeria, the Central Bank tems globally. of Sri Lanka, and the Bank of Thailand. Appen- First and foremost, we are grateful to the govern- dix B of each country report lists the many people ment of the Republic of Korea for its leadership interviewed during the study; their participation in the area of information and communications is greatly appreciated. technology for development, and for funding this study to promote the m-money agenda for the The following IFC and World Bank colleagues public benefit. in the respective countries provided local insights and liaison with the above-mentioned partner- Intelecon Research and Consultancy Ltd of Van- ing institutions, and helped the team conduct couver was contracted by IFC (International meetings and field surveys: Alexandre Darze and Finance Corporation) to conduct the IFC Mobile Terence Gallagher (Brazil), Theophilus Adewale Money Study 2011, including in-country field- Onadeko (Nigeria), Asela Tikiri Bandara Dis- work. Andrew Dymond, Steve Esselaar, and sanayake (Sri Lanka), and Frederico Gil Sander Sonja Oestmann authored the reports, assisted and Ratchada Anantavrasilpa (Thailand). by the rest of the Intelecon team. The team also included Jenny Hoffmann from RiskFrontier Several individuals within IFC, infoDev, the Consulting (United Kingdom) and local research World Bank, and the Consultative Group to Assist partners in each country: Antonio Bothelo of the Poor helped create this report, providing ser- Diálogo Regional sobre la Sociedad de la Infor- vices including Trust Fund administration, proj- mación (Brazil), Ike Moweto of Research ICT ect management, project design, expert advice, Africa! (Nigeria), Harsha de Silva of LIRNEasia peer review, administration of in-country surveys, (Sri Lanka), and Deunden Nikomborirak of Thai- coordination, printing, and public relations. land Development Research Institute (Thailand). We are grateful for the insightful inputs and peer We are also extremely grateful to our partner- reviews by Hemant Baijal, Deepak Bhatia, Mar- ing m-money operators for their cooperation: Oi garete Biallas, Massimo Cirasino, Andi Dervishi, Paggo in Brazil (a new company, Paggo Soluçoes, Janine Firpo, Soren Heitmann, Eriko Ishikawa, has since been formed), eTranzact in Nigeria, Nikunj Jinsi, Samuel Kamau Nganga, Tim Kelly,
xi xii IFC Mobile Money Study 2011: Thailand
William Kerr-Smith, Yong Hyun Kwon, Samia D’Costa, Philippe Dongier, Gilles Galludec, Mat- Melhem, Harish Natarajan, John Irungu Ngahu, thew Gamser, Dianne Garama, Idawati Harson- Mark Pickens, Christine Zhen-Wei Qiang, gko, Oleh Khalayim, Sujata Lamba, Henna Lee, Wiebke Schloemer, Josef Skoldeberg, Hourn Thy, Kent E. Lupberger, Trang Nguyen, Marcia Roa, Michael Trucano, and Shinya Yoshino. Colin Shepherd, Peer Stein, Stephanie Von Frie- deburg, and Ann-Marie Webster. Mary Paden edited the text to make it very user- friendly. Nita Congress gave it a wonderful design.
The project could not have been completed with- out the administrative and managerial support Arata Onoguchi, Leila Search, and Piya Baptista of Greta Bull, Catherine H. Burtonboy, Valerie IFC Mobile Money Study 2011 Project Team Abbreviations
2G second generation 3G third generation AIS Advanced Info Service AML anti-money-laundering ATM automated teller machine B2B business to business CFT combating the financing of terrorism e-money electronic money e-payment electronic payment e-PIN electronic personal identification number e-wallet electronic wallet EDC electronic data capture G2P government to person GDP gross domestic product GPRS general packet radio service GSM global system for mobile communications IFC International Finance Corporation IVR interactive voice response K-Bank Kasikorn Bank m-banking mobile banking m-money mobile money m-payment mobile payment MNO mobile network operator NFC near-field communication P2P person to person POS point of sale SIM subscriber identity module Singtel Singapore Telecom SMS short message service STK SIM Toolkit TMX TrueMoney Express USSD unstructured supplementary services data VOIP voice over Internet Protocol WAP wireless application protocol
The average exchange rate for the year 2010 of 31.69 Thai baht/1 U.S. dollar is used throughout.
xiii
Summary
hailand has a highly developed financial transfering money from small businesses—par- sector. Bank branches are widespread. ticularly those in rural and semi-urban areas— Credit and debit cards are experienc- to their bank accounts using a mobile phone Ting rapid growth, and credit cards are platform. Its retail consumer customer base was beginning to penetrate the low-income market. not the primary success of its m-money plat- The number of point-of-sale (POS) devices has form; rather Advanced MPay’s main success increased dramatically. Automated teller machines has been in providing an efficient mechanism (ATMs) are becoming the primary means of con- to small businesses to transfer money from ducting financial transactions. The level of finan- rural and semi-urban areas to bank accounts. cial sophistication (in terms of financial infrastruc- ture and POS and ATM penetration) means that DTAC has partnered with K-Bank to offer the the best solution for mobile money (m-money) in ATM SIM (subscriber identity module) prod- Thailand will be a combination of mobile phone uct. By integrating into the K-Bank infrastruc- use and debit, credit, and prepaid cards. ture, DTAC can offer a more secure platform for financial transactions than most MNOs. Three m-money providers have been relatively successful in the market: TrueMoney, a subsidiary Thai m-money providers could exploit several of True Corporation; Advanced MPay, a subsid- opportunities. They could leverage the domestic iary of Advanced Info Service (AIS); and a part- infrastructure that it has established in bill pay- nership between DTAC, a mobile network opera- ments to offer a clearly structured remittance tor (MNO) and Kasikorn Bank (K-Bank). product for Thai workers overseas. They could also investigate using its existing money transfer ser- These companies have launched m-money initiatives vice for small businesses where banks are not able that provide valuable lessons for similar countries: to offer as efficient a service either for non-face- Leveraging the massive customer base available to-face payments or for businesspeople who are to it as a member of the True Corporation con- frequently on the move between clients. Finally, glomerate, TrueMoney provides a service to the because the Thai government has not made its whole conglomerate’s customers enabling them payroll fully electronic, m-money might provide to pay their bills conveniently and cheaply. an easy mechanism to make government pay- ments more efficient. Advanced MPay has exploited a gap in the services banks offer small businesses. It pro- TrueMoney has demonstrated a variety of success- vides a cheap, fast, and efficient mechanism for ful measures in its m-money initiatives:
1 2 IFC Mobile Money Study 2011: Thailand
Leveraging internal business needs—finding a Table S.1 summarizes Thailand’s m-money oppor- cost-effective way to receive bill payments for tunities. Thailand, with three m-money provid- group company services ers, allows few opportunities for new entrants. Its financial infrastructure, including ATM kiosks, is Integrating into the banking system by provid- rapidly expanding outside of the Bangkok region. ing the ability to move funds between accounts Though there are increasing levels of competition and electronic wallets (e-wallets) and several challenges from an agent perspective, Providing a clear value proposition to existing two markets in particular have not yet been fully customers exploited: person-to-person (P2P) transfers and business-to-business (B2B) payments. The fact Integrating into existing retail networks that a significant portion of small businesses still Experimenting with innovative near-field com- use cash means that there is an opportunity for munication (NFC) technology. m-money in this market. Summary 3
Table S.1 Mobile Money Opportunities in Thailand
Potential Potential transactions/ market Assessment Description Challenges and obstacles month
Bill payments Existing m-money bill payment system, Existing bill payments using m-money 13,404,916 (utilities) but in direct competition with banks for services that are part of TrueMoney; Survey shows a wide variety of payment breaking out of that ecosystem will be channels used difficult
Person-to- Substantial number of transfers ATMs are expanding rapidly Unknown person (P2P) accomplished at the bank counter: Transfers can be accomplished easily transfers in 2008, 55.4% of transactions were via ATM even in the absence of a bank made at the bank counter and 44.6% account by direct debit Banks are already offering services at low cost Mobile operators are focused on 3G investments
Government- Potential demand relatively small (but Elderly prefer cash payments that are 646,800 to-person welfare system is growing) delivered personally to them (G2P) payments
Payroll Large informal sector Payments already facilitated by 20,988,000 (informal extensive financial network of ATMs sector)
Public Large-scale opportunity with clear value Needs NFC to succeed, requiring 58,873,333 transport proposition to replace existing system, investment and NFC handset adoption which has different e-cards for different systems
Business- Potential opportunity for small Banks might reduce rates and squeeze — to-business businesses to transfer money, smaller operators such as Advanced (B2B) competing with existing, more MPay out of the market payments expensive financial services Advanced MPay is already offering this service
International Overseas remittances could be No data — remittances substantial Very little research has been done on the methods expatriate Thai workers use to transfer money from overseas
Credit and Potential market for credit; however, Strong competition from financial — microfinance banks are expanding rapidly and sector offering credit cards to low-income In 2009, there were also 6,997 local earners, making this unlikely to be a cooperatives of which 1,796 were viable market for m-money purely for financial services (thrift and credit or credit unions)
Source: IFC Mobile Money Study 2011. Note: = potential opportunity but there are substantial challenges; = unlikely to be any m-money opportunity due to lack of economies of scale or other constraints; — = not available. 1Introduction
lthough a number of m-money busi- Which countries are the most likely to have a nesses have emerged around the world, mass market for m-money, and how can they few have reached significant scale. Over- be identified? all, m-money uptake is limited when A What business strategies and partnership models contrasted with its apparent promise of reaching can best exploit m-money opportunities? the unbanked and underserved, servicing existing banking clients, and being a means for realizing a Where are the best investment opportunities? cashless society. This report provides detailed information on Thai- land regarding five main topics—business models, Study Focus money flows and demand, potential user percep- tions and behavior, regulation, and agent networks. This study examines the following in more detail: Existing major money flows and the critical Socioeconomic Country mass of low-value, high-volume payment trans- Context actions and whether m-money can be used for them (i.e., potential demand) Thailand is described by the World Bank as a middle-income country. Various factors, includ- Regulatory environment and major obstacles ing government policy objectives, have resulted in for m-money uptake more than 90 percent of the population having a Business models of partnering institutions bank account.1 A competitive banking industry is driving access through the addition of branches as Payment behavior of users and nonusers well as through electronic channels such as ATMs, (banked and unbanked), in particular where POS devices, and the Internet. they receive funds and how they use money, including alternative means In the decade ending in 1995, the Thai economy Existing and potential agents’ networks, their was one of the world’s fastest growing at an average requirements to run m-money as a viable busi- annual rate of 8–9 percent. After recovering from ness, and their training needs. the Asian crisis of 1997–98, the Thai economy took off again. From 2002 to 2006, Thailand’s growth The key analytical questions guiding the study follow: 1 This figure was derived from data collected from banks and the Bank of Thailand in country. It is considerably How can m-money adoption be accelerated? higher than the figures cited by the World Bank (2008).
4 averaged 5.6 percent annually. However, the recent shows that Thailand has a relatively equal income global financial crisis affected this region, and in distribution, greater than that of Malaysia or the 2009 the economy contracted by 2.8 percent. Philippines and slightly less than Singapore’s. Two-thirds of the Thai population lives in rural Although Bangkok and its surrounding area play a areas, and 38 percent of the labor force works in dominant role in the economy, the Gini coefficient agriculture. 2Demand Perspective
e examined Thailand’s demand for m-money both qualitatively and Table 2.1 Potential Mobile Money Market Segments quantitatively. Figure 2.1 gives esti- mates of total monthly volumes (not Market W segment Description values) of transactions in key demand areas that could offer m-money opportunities. However, Bill In developing economies, it is common to pay m-money must compete with both traditional payments bills by queuing outside the utility company. payment methods and other electronic money (utilities) Although this may be a niche market, the value (e-money) options and is therefore unlikely to be proposition is to provide a convenient, safe, and fast mechanism to pay bills. able to capture all of this potential. P2P The success of Kenya’s M-PESA indicates that Table 2.1 gives a detailed qualitative description transfers there is a large unmet demand in transferring of potential markets. Based on both desk research money between people. and field visits, the following potential markets for G2P Governments make regular payments to at least m-money were investigated: bill payments, P2P payments 170 million poor people worldwide.a The value proposition is to provide a more cost-effective transfers, government-to-person (G2P) payments, and time-saving service to citizens.
Payroll This segment might overlap with the P2P (informal market, but is a more specific opportunity for an Figure 2.1 Potential Monthly Transactions sector) m-money application allowing small businesses in Key Mobile Money Market Segments in in the informal sector to pay their staff. Thailand Public The success of NFC technology in Japan indicates Millions transport that there is potentially a massive market, 60 particularly for NFC-enabled phones. 58,873,333 B2B B2B payments in rural areas beyond the reach of 40 payments banks are difficult and handled mainly by cash or check. M-money could provide mobile payment 20,988,000 capabilities at each stage along the value chain. 20 13,404,916 Retail Cash is less secure than e-money. Consumers may Unknown 646,800 0 payments find paying with an NFC-enabled card or phone Bill P2P G2P Payroll Public more secure and more convenient than using cash. payments transfers payments (informal transport (utilities) sector) Source: IFC Mobile Money Study 2011.
Source: IFC Mobile Money Study 2011. a. Pickens, Porteous, and Rotman 2009.
6 2. Demand Perspectives 7
payroll, public transport, B2B payments, and retail payments. Figure 2.2 Means of Remittance Transfer Reported by Domestic Migratory Workers Where appropriate and possible, additional from Thailand and Sri Lanka potential applications for m-money were also Deposit into recipient investigated. Depending on data availability, the bank accounts size of these markets was estimated to establish the Take money with me relative size of the m-money opportunity. Each when I go home potential market is discussed below. Send cash with a friend or relative Postal money order/ Bill Payments postal mail Bill payments can be made in person at bank Purchase goods & send through others Thailand counters, ATMs, POS devices at merchants, and Sri Lanka by direct debits. In 2008, 55.4 percent of transac- Refused to answer tions were made at the bank counter and 44.6 per- 020406080 100 cent by direct debit. Most of the bank counter pay- Percentage of respondents ments by volume are made by cash. Bill payment Source: LIRNEasia 2009. via m-money services was the third most popular Note: Multiple selections were allowed. function in the demand survey. At first glance, this looks like an opportunity for m-money. However, the use of ATMs to pay bills is rapidly increasing. banks decide to compete for the market. How- ATMs now offer a full range of services, including ever, the success of DTAC’s ATM SIM product bill payment. Banks are promoting ATM roll-out (discussed in chapter 5) shows that there is still aggressively, especially outside of Bangkok. significant demand, even with added competition. Also, the poor geographic distribution of ATMs at It is an increasingly competitive market, but there this stage means that there is an opportunity for appears to be room for m-money in the short to P2P transfers outside the ATM network (i.e., out- medium term. side of Bangkok). Person-to-Person Transfers Government-to-Person Overseas remittances to Thailand are substantial, Payments but little research has been done into the meth- ods that expatriate Thai workers use to transfer In response to the global recession, the govern- money from overseas. In contrast, some research ment of Thailand implemented a monthly living has been done into domestic remittances. A 2009 allowance of B 500 (about US$16) to all citizens study by LIRNEasia (figure 2.2) shows that a sig- aged 60 years and over who are not entitled to nificant number of migratory workers use either other government pensions. Currently, all dis- the extensive postal or banking networks, while a bursements are made at village-level government negligible number of respondents physically carry offices. For example, in one government office, 18 money home with them (in contrast to remittance staff members were tasked with distributing funds trends in Sri Lanka). to 500 people (out of a community of 3,500), which takes about three days per month. Despite The financial services sector provides significant the inefficiency, the villagers, when asked, said this competition for domestic fund transfers. Banks is their preferred method of receiving money. It are expanding their ATM networks aggressively. seems that villagers enjoy the interaction with gov- Currently, MNOs charge less than banks for ernment officials and chose it over mobile phone transfer services, but this could easily change if delivery. 8 IFC Mobile Money Study 2011: Thailand
Other opportunities for m-money include the fol- system that services Bangkok from outlying areas lowing: uses yet another system. Tickets can be bought using cash at vending machines at stations. Government tax credits are paid by check. They were paid electronically into bank accounts in the past, but this was recently discontinued. Business-to-Business Payments Approximately 83,000 villages manage revolv- ing funds for microfinance as well as a grant Coca-Cola was used as a proxy to estimate the fund for community projects. The initial fund potential for mobile B2B payments. Coca-Cola is B 1 million (almost US$32,000). is one of the largest fast-moving consumer goods companies in the world with significant opera- Providing a secure and efficient system for trans- tions in Thailand. About 26,000 small busi- ferring funds to individuals (e.g., tax credits) or nesses receive deliveries on a regular basis; most microfinance loans (village funds) could have a pay in cash. There are significant potential bene- substantial impact. These two examples need to fits to providing a more cost-effective and efficient be investigated further. method of payment. Informal Payroll Many small businesses still provide business pay- ments in cash. Advanced MPay has seen an oppor- The informal sector in Thailand is relatively sub- tunity to provide m-money to these small busi- stantial, employing about 58 percent of the work- nesses, mainly outside of Bangkok. Banks have force, or more than 20 million workers. Since not taken advantage of the service to small busi- Thailand remains a largely cash economy (outside nesses. While this may change in the long run, of Bangkok), there is an opportunity for m-money there is an opportunity to provide supply chain to provide services to the construction and infor- optimization services (such as using m-money to mal retail sectors. pay for business inputs).
Public Transport Thailand has an extensive retail network, well served by multiple international retail chains as The number of public transport trips per month well as a multitude of individual businesses. CP in Thailand is 58 million. Currently, different Freshmart, part of the CP Group, has about 550 payment platforms are used for different modes stores countrywide, all of which are agents for of transport. There is substantial support among TrueMoney Express (TMX), TrueMoney’s pay- MNOs, other payment providers, and the gov- ment counter service dealer (see chapter 5). The ernment for the concept of a single ticketing basic functions of TMX include bill payment, system. Single ticket transit is an objective out- airtime top-up, and electronic personal identi- lined in the Bank of Thailand’s “Payments System Report 2008.” If a single ticketing system were to fication number (e-PIN) sale. Chains such as be implemented, it would represent an opportu- 7-Eleven have an extensive network of stores in nity to introduce NFC-enabled cards or phones to Thailand and offer bill payment and money trans- reduce costs. However, all rail stations and buses fer services. would need to be equipped with NFC readers. Other In Bangkok, the Chaloem Ratchamongkhon Line of the Mass Rapid Transit System is the first Additional markets show promise for m-money, underground metro in Thailand. The Bangkok but they have not been quantified in terms of underground requires the purchase of one kind number of monthly transactions. Qualitative of machine-readable token, whereas the Skytrain data, such as interviews and desk research, have uses a different machine-readable system. The bus been used to estimate their size. 2. Demand Perspectives 9
Retail Sector TrueMoney which enables bill payment, airtime top-up, and e-PIN sales to be done in person. Thailand has an extensive retail network, well Chains such as 7-Eleven have an extensive net- served by multiple international retail chains work of stores in Thailand and offer bill payment as well as a multitude of individual businesses. Makro was the first international retailer to enter and money transfer services. Thus, there is already Thailand. Soon after, the CP Group launched the some familiarity with m-money, and it is relatively Lotus brand in Thailand; it later formed a partner- easy to sign up these retailers as agents. ship with the U.K.-based Tesco in 1998 to create Tesco Lotus. Also new to the market were Big C, Credit and Microfinance a chain of super stores originally from Central Group; and Carrefour, a supermarket chain that In Thailand, there are 6,997 local cooperatives of started as a joint venture between Central Group which 1,796 are purely for financial services (thrift and Carrefour. CP Freshmart, a chain of conve- and credit or credit unions). A large proportion nience stores that is part of the CP Group, has of cooperative members live in the northeast and about 550 stores countrywide, all of which fea- north regions away from Bangkok. This sector is ture TMX, the payment counter service dealer of well served by the financial services sector. Parameters of the 3Mobile Money Ecosystem
s explained in appendix A, Methodology, of the IFC Mobile Money Study 2011: Figure 3.1 Thailand’s Mobile Money Market in the Porteous Regulatory Environment Model Summary Report, a number of parameters that tend to influence the success or fail- High A 2 1 ure of m-money operations were identified through a review of the literature and refined during field Low certainty; High certainty; high openness high openness visits. Table 3.1 (next page) provides an overview of the parameters selected. The relevant parameters in Thailand Thailand are discussed in this chapter.
Enabling Regulation OPENNESS 4 3 Low certainty; High certainty; Summary Assessment low openness low openness The regulatory framework in Thailand is relatively open. There is no specific regulation or law cov- Low ering m-money; rather, it is covered by several Low CERTAINTY High notifications and circulations, and falls under the Source: IFC Mobile Money Study 2011, based on Porteous 2006. broader framework of the Royal Decree Regulat- ing Electronic Payment Services, which is gov- erned by the Bank of Thailand (the central bank). The Bank of Thailand Anti-money-laundering (AML) regulations are covered by the Bank Act. A new act covering The Bank of Thailand is supportive of m-money e-money is currently in the form of a discussion and sees the move toward electronic payment document produced by the Office for Anti- (e-payment) systems as a key contributor to eco- Money Laundering, which reports to the Ministry nomic growth. Cash is often seen as free to bank- of Justice. There is a risk that the new AML reg- ing customers, particularly when the pricing struc- ulations will slow the development of m-money ture offered by their banks offers free withdrawals if they add more stringent m-money regulations. and or deposits. However, the high costs of cash Nevertheless, Thailand fits within the “high cer- management to banks, government, and busi- tainty and high openness” category in figure 3.1, nesses mean that these stakeholders have a strong which is the best position for innovative business incentive to encourage the use of alternatives to development. cash. Reducing the use of cash should reduce the
10 3. Parameters of the Mobile Money Ecosystem 11
Table 3.1 Parameters Affecting the Success of Mobile Money Services
Category Parameters
Socioeconomic Population GDP/capita Geographic area Remittance flow context Poverty GDP by region Urbanization; rural Gini coefficienta population
Regulation Clear and risk-based Know-your-customer Agent regulation ID system regulatory framework regulation Interoperability Pricing restrictions on M-money license Bank outsourcing requirements accounts requirements Mandatory services banks Regulations on new Level of expensive Obstacles to international must offer branches requirements remittances
Existing access Reach of networks/agents Penetration/use of cards Penetration/use of prepaid Internet banking usage to financial Informal financial access Nonbank provision of cards Unbanked population services Competitiveness of banking financial services Cash-electronic transaction industry ratio (use of cash)
Existing mobile Population penetration/ Geographical coverage Level of competition 3G penetration/usage market situation coverage Level of fragmentation of Churnb industry
Potential Bill payments Public transport P2P transfers G2P payments demand B2B transfers Credit and microcredit International remittances Savings Retail payments
Retail sector Retailers with national Level of fragmentation Postal network Other distribution networks coverage
Payment system POS terminal penetration Mass payment acceptance Card penetration National switchc Dominant payment Third-party payment methods in the economy processors
Pricing Distortion through Banking services pricing intervention/regulation
User perceptions Trust in mobile operators Willingness to pay for Cultural factors versus banks m-money service
Sources: IFC Mobile Money Study 2011; CGAP. a. The Gini coefficient is a measure of the inequality of a distribution, with a value of 0 expressing total equality and a value of 1 maximal inequality. b. “Churn” in the telecommunications industry means customers move from one network operator to another. c. “National switch” here means an online interbank fund transfer system.
overall cost of doing business for all stakeholders, implementation, recommends removal of laws as noted by the Bank of Thailand in its “Payments and regulations that impede e-payments and the Systems Roadmap 2010” (box 3.1.) building of public trust in a cashless society.
The Bank of Thailand, which has outlined the According to a Bank of Thailand survey, consum- objectives, strategies, and activities that govern- ers and businesses give greater weight to certain ment and regulators will implement over five- types of “nonprice” factors such as legal support year periods, along with the obstacles to their regarding the use of e-receipts and e-documents, 12 IFC Mobile Money Study 2011: Thailand
e-payment business into three types according to Box 3.1 Bank of Thailand “Payment Systems risk and impact: Roadmap 2010”: Cash Although electronic payment systems have become increasingly Type A relates to closed-loop payment cards or prominent and popular in Thai economy, they are generally a system for purchasing one product or service confined to limited groups of users. In rural sectors where cash from a specific retailer or group. Operators of is the only available means of payment, cash payment is still Type A systems need to notify the regulatory preferred for its convenience and familiarity. In urban areas, commission of their intention to launch. the cash payment ratio is relatively high in selected business Type B is a network service (e.g., credit card) sectors, such as public transportation and retail. Customers of or electronic data–capturing network service. large retail stores and small convenience stores still pay for It also includes switching services and issuing goods and services with cash. prepaid e-money to pay for multiple products A high cash payment ratio is regarded as one of the main and services under a single management entity. obstacles to overall national economic development because These providers need to register with the Elec- of its higher management and service costs in comparison tronic Transaction Commission. to electronic payment. Embedded in cash payment are the Type C service providers must apply for a additional costs of transportation, screening and counting, license to operate. The services they provide disposal (of old bank notes), and insurance. include the following: Besides, most cash payment involves face-to-face transactions Electronic withdrawal from a bank account which take a longer time to process because money needs to E-payment where the provider must provide be counted and change need to be calculated. Since the actual payment confirmation to the customer, the intent of cash payment is more difficult to monitor and regulate payee must receive the payment immedi- than electronic payment, cash payment is subject to higher ately and unconditionally, and the transac- risks of loss, theft and robbery, illegal business transactions, tion must be irrevocable and tax evasion. E-payment via an electronic device or net- Source: Excerpted from Bank of Thailand 2007. work, with the provider issuing proof of payment to the customer via an agreed method as well as effective mechanisms to ensure a more secure environment for e-payments. The Bank of Multisystem switching services that allow Thailand has focused on changes in legal and regu- payments among member banks and com- latory frameworks regarding e-payment, illustrat- panies ing its commitment to greater reliance on e-pay- E-payment services on behalf of customers; ment channels for retail payments by consumers this can serve multiple merchants, which are and businesses. not necessarily managed by the same entity (or under a single company). Mobile Money Regulatory Framework The regulatory requirements for Type C pro- viders include the following: The regulations that affect m-money in Thai- land are the 2001 Electronic Money Transaction Minimum registered capital of B 200 mil- Act and the 2008 Royal Decree on Monitor- lion (about US$6.3 million), and, if the ing Electronic Business.1 The decree categorizes provider is an MNO, the business must be a separate legal entity 1 BC 2544 article 32,33,34 and 2; and BC 2551, published in Royal Gazette 16 September, 2008 and 100 percent reserve for money stored in enforced as of January 14, 2009. e-wallets (this is currently required to be in 3. Parameters of the Mobile Money Ecosystem 13
noninterest-bearing accounts but is being Use of Agents reviewed to possibly include government There do not appear to be any regulations restrict- bonds) ing the use of agents, though banks currently pro- Tariffs that are not regulated require notice vide access through a wide range of self-service to the Bank of Thailand kiosks and ATMs in addition to their branches. The post office has been acting as an agent for com- Clear disclosure of tariffs to customers is mercial banks for several years, and foreign banks required use the infrastructure of other commercial banks No maximum transaction size is imposed, as agencies. Each licensee must notify the Bank of but operators are required to assess the risks Thailand of the use of agents. Service offerings of and report their decisions to the regulator. any agent network with cash-in and cash-out func- tionality need to be competitive and diversified, Interoperability among systems is not yet manda- given that more than 90 percent of respondents tory, although a committee is examining this issue. surveyed use ATMs for cash withdrawals.
Anti-Money Laundering and Pricing Interventions Combating Terrorist Financing Regulations The Bank of Thailand believes that judicious inter- ventions in pricing certain bank transactions pro- AML regulations are covered by the Bank Act. vide consumer protection and can support govern- In January 2007, a policy statement, “Measures ment policy. For example, banks might encourage on Anti-Money Laundering and Combating the the use of electronic channels and payment instru- Financing of Terrorism (AML/CFT) for Financial ments to protect consumers and encourage indus- Institutions,” was issued. However, the Interna- try competitiveness. Table 3.2 shows there is a tional Monetary Fund’s report on Thailand’s com- maximum fee of B 25 (US$0.79) for online retail pliance with international standards regarding transactions of less than B 10,000 (US$316) AML and CFT expressed concern that the frame- and B 35 (US$1.10) for transactions of between work was a combination of unenforceable guide- B 10,000 and B 30,000 (US$316–US$947). Reg- lines, circulars, and regulations, which did not ulations ensure that charges for checks are higher comply with the standards of the Financial Action than for electronic fund transfers, aligning fees Task Force (IMF 2007). This concern included more closely with costs incurred. the type of accounts for which customer due dili- gence was required. A new act is being proposed that will cover e-money. At present, it is a discus- Table 3.2 ATM Interbank Fund Transfer Fees sion document produced by the Office for AML which reports to the Ministry of Justice. Funds transferred B (US$)
Currently, customers can register quickly and 0–10,000 10,001–30,000 Fee (0–316) (316–947) easily for an e-wallet by providing details of their national identification; this information is Fee 25.00 (0.79) 35.00 (1.10) then verified by the Ministry of Interior within Receiving bank 3.22 (0.10) 5.22 (0.16) 24 hours. There is some concern that the new reg- Sending bank 7.00 (0.22) 10.00 (0.32) ulations will make this process more challenging. To open a savings account, a bank employee must ATM owner 12.00 (0.38) 18.00 (0.57) view and take a copy of the customer’s national Online retail funds transfer 1.78 (0.06) 1.78 (0.06) ID card. (National ID cards are widely held and (payment settlement) are thus not a barrier to opening a bank account Source: Bank of Thailand 2010. or e-wallet.) 14 IFC Mobile Money Study 2011: Thailand
Existing Access to Financial some of which had a widespread branch infra- Services structure. There were 15 foreign banks with oper- ating branches, 3 finance companies, and 26 per- Table 3.3 shows the relative importance of cash sonal loan companies in Thailand. In 2009, there in countries across Asia. In general, Japan and were also 6,997 local cooperatives, of which 1,796 Thailand used cash for more than 90 percent of were purely for financial services (thrift and credit their purchases and bill payments, while Hong or credit unions). A large proportion of cooperative Kong and Singapore used 70 percent and South members lived in the northeast and north regions, Korea used less than 60 percent (Khiaonarong and far from Bangkok. All commercial banks are regu- Humphrey 2005). lated by the Bank of Thailand; the other institutions are regulated by the Ministry of Finance or by both. Table 3.3 Relative Importance of Cash in Selected Asian Economies, 2004 (%) Despite the economic slowdown, commercial banks remain focused on continued installation Economy Cash/M2 Cash/GDP of new ATMs, as these are the most cost-effective Hong Kong 3.4 10.9 means by which to enhance accessibility of bank services (table 3.4). At the same time, commercial Indonesia 10.6 4.7 banks are expanding their branches into areas such Malaysia 5.4 6.4 as department stores and highly populated neigh- Philippines 13.8 5.45 borhoods, while promoting a wider range of self- service banking products that facilitate 24-hour Singapore 6.6 7.6 banking transactions. As a result, the number of South Korea 2.03 2.5 ATMs in Thailand has increased at an average of Taiwan, China 2.9 6.6 35 percent per year since 2004 (figure 3.2), which led to a decrease in the average transactions per Thailand 10.3 9.3 ATM from 49,000 in 2005 to 36,000 in 2008. Source: Asian Development Bank. Almost everyone—90–97 percent of local respon- dents surveyed—uses ATMs regularly. Thai banks hold approximately 140 million In 2008, more than 70 percent of Thailand’s accounts for a population of about 66 million. ATMs were in Bangkok and the central region, Although there has been no recent research on where most financial institutions, business cen- the number of people who do not have a bank ters, and tourist attractions are located. Interest- account either with a commercial or specialized ingly, the number of ATMs in Thailand’s other government-owned bank, the consensus is that it three regions, which are far from the capital city, is less than 10 percent of the population—about account for only 30 percent of the total although the same as in the United States or the United 66 percent of the population lives there. Kingdom. These unbanked people tend to be unregistered workers, refugees from places such as Because of a rapid spread of ATMs throughout Lao People’s Democratic Republic or Myanmar, the country, the average persons per ATM in each farmers, or elderly people in rural villages. region has dropped by three-quarters within four years: from 50,137 persons per machine in 2004 Banking Industry to only 14,446 in 2008. The most popular ATM At the end of 2009, Thailand had 14 commer- service is cash withdrawal, accounting for approxi- cial banks and 8 specialized financial institutions,2 mately 80 percent of all transactions. Meanwhile, interbank and intrabank transfers accounted for 2 The eight specialized institutions are the Bank of Agri- culture and Agricultural Cooperatives, the Export-Import Enterprise Development Bank of Thailand, the Small Bank of Thailand, the Islamic Bank of Thailand, the Sec- Industry Credit Guarantee Corporation, the Government ondary Mortgage Corporation, the Small and Medium Housing Bank, and the Government Savings Bank. 3. Parameters of the Mobile Money Ecosystem 15
Table 3.4 Summary of Thailand’s Banking Infrastructure
Element Bangkok Central Northeast North South Total
Number of full bank branches 1,719 1,630 625 616 607 5,197
Number of subbranches 227 197 49 55 77 605
Number of ATMs 12,624 11,871 3,673 3,230 3,398 34,796
Total 14,570 13,698 4,347 3,901 4,082 40,598
% of total bank infrastructure 35.89 33.74 10.71 9.61 10.05 100
Population 5,710,883 15,615,968 21,442,693 11,878,641 8,741,545 63,389,730
% of population 9 25 34 19 14 100
Source: Bank of Thailand.
Figure 3.2 Number and Growth of ATMs Figure 3.3 Growth in Internet Banking
Number of ATMs (thousands) — Growth rate (%) Volume of transactions (millions) — Growth rate (%) 40 60 35 140
50 30 120 30 25 100 40 20 80 20 30 15 60 20 10 10 40 10 5 20 0 0 0 0 2004 2005 2006 20072008 2004 2005 2006 2007 2008
Source: Bank of Thailand. Source: Bank of Thailand.
7 percent each, which may indicate a growing use of ATMs for bill payments. Figure 3.4 Uses of Internet Banking, 2008
In 2008, Internet banking transactions increased Other 47.9 percent to 31 million transactions from 15% 21 million transactions in 2007; the average growth rate per year was 42 percent over the last Salary In-house three years (figure 3.3). payment transfer 15% 43% Respondents in the local survey indicated that the Internet was the third most popular way to transfer money. In 2008, Internet banking services were used Goods & services for fund transfers within the same banks (42.7 per- payment cent), payment for goods and services (27.5 per- 28% cent), payment for salary and wages (15.1 percent), and other services (14.8 percent) (figure 3.4). Source: Bank of Thailand. 16 IFC Mobile Money Study 2011: Thailand
Credit and Debit Cards Table 3.6 Average Monthly Credit, Debit, and Credit and debit card penetration has exploded in ATM Card Payments/Withdrawals in B (US$) the past few years. Between 2006 and 2008, the number of debit cards increased from 3.9 million Payment/withdrawal 2004 2006 2008 to 26.2 million, a growth of more than 570 per- Credit card payment 8,460 3,463 3,395 cent (table 3.5). (267) (109) (107) Cash withdrawal using ATM card 5,660 7,724 6,056 Debit cards and ATM cards are widely available; (179) (244) (191) more than one in three people has one. The low Debit card payment — 73 (2) 75 (2) monthly value (B 75 or US$2.37) of debit card purchases shows that these cards are primarily Cash withdrawal using debit card — 7,329 7,640 used for cash withdrawals at ATMs (table 3.6). (231) (241) Source: Bank of Thailand. Most Thais are more comfortable using ATMs Note: — = not available. Payments include only those from cards issued in than they are using credit and debit cards for pur- Thailand for goods/services paid for via electronic fund transfer POS in Thailand. chases (figure 3.5).
Pricing Figure 3.5 Self-Reported Rating of Ability to Use Various Financial Devices Banks do not charge a fee for cash withdrawals or deposits at ATMs or at the bank branch, pre- Percentage of respondents ferring to charge an annual ATM card fee. Banks 100 do not usually charge transaction fees. However, if the balance in an account is less than B 500–1,000 80 Prepaid card (US$16–US$32), there is usually a monthly fee. Debit card 60 Counter service Existing Mobile Access and 40 Internet Market Situation ATM 20 Mobile phone According to a socioeconomic survey conducted by the Thailand National Statistical Office, the 0 rate of mobile phone ownership in Thailand has Lowest Low Medium High Highest been growing rapidly. Table 3.7 shows the increase Source: IFC Mobile Money Study 2011.
Table 3.5 Growth in Credit, Debit, and ATM Cards
Number of cards Average population/carda
Type of card 2004 2006 2008 2004 2006 2008
Credit 8,646,100 10,900,566 12,971,694 7.53 5.99 5.11
Debit 8,425,023 13,952,784 26,266,359 — 16.51 2.52
ATM 25,834,027 30,845,358 22,423,525 2.54 2.12 2.96
Population 65,080,000 65,280,000 66,320,000
Source: Bank of Thailand. Note: — = not available. a. This measure is average number of people per card, not average number of cards per person. The lower the number, the fewer people share a card as card numbers increase. 3. Parameters of the Mobile Money Ecosystem 17
Table 3.7 Percentage Distribution of Mobile Phone Ownership by Household Socioeconomic Status and Location
Factor 2002 2004 2006 2007 2008
Socioeconomic status
Small farmers 9.2 30.9 47.7 59.2 79.3
Medium farmers 11.4 40.5 62.7 72.9 91.3
Large farmers 25.5 58.5 82.1 84.0 96.7
Farm leasers 11.7 44.4 64.7 70.2 95.7
Fishery, forestry, agricultural services 21.4 45.6 44.2 54.1 77.5
Entrepreneur, trade 45.2 74.3 83.0 87.5 94.5
Professional, technical, managerial 74.2 92.9 96.8 97.6 98.1
Laborers 5.8 32.2 54.6 64.0 75.0
Other 36.3 69.6 82.1 87.8 92.4
Inactive 16.1 41.3 55.3 64.0 78.0
Type of location
Municipal area 50.0 75.9 84.9 88.1 93.8
Nonmunicipal area 20.3 50.2 66.3 74.5 87.3
Region
Bangkok metropolis 59.0 83.0 91.0 93.7 98.5
Central (excluding Bangkok) 42.1 71.5 80.5 84.5 89.0
North 20.9 50.4 64.8 71.8 87.4
Northeast 15.5 44.9 64.6 73.5 89.5
South 30.4 58.5 70.6 79.5 86.5
Source: Thailand NSO 2009. Note: Data are as of September 2009. Small farmers are those who own less than 10 rai of land, medium farmers own 10–39.99 rai, large farmers own more than 40 rai. (1 rai = 1600 square miles.)
of mobile phone ownership by households’ socio- in the local survey, the majority of respondents economic status and location. In 2002, none of indicated using mobile phones. Approximately the socioeconomic groups—except professional, 55 percent use a Nokia model phone of 2G capa- technical, and managerial—had an ownership rate bility. of more than 46 percent. Only 5.8 percent of the laborer households and 9.2 percent of the small In terms of location, the growth of mobile phone farmer households owned a mobile phone. By ownership in rural areas and outside Bangkok has 2009, the ownership rate of every socioeconomic been rapid. In 2002, only 20.3 percent of house- group was above 75 percent. Notably, the rates holds in nonmunicipal areas owned at least one were 75 percent for laborers, 79.3 percent for mobile phone; in 2009, 87.3 percent owned small farmers, 91.3 percent for medium farmers, phones. The same growth pattern can be seen in and 96.7 percent for large farmers. As indicated areas outside Bangkok. 18 IFC Mobile Money Study 2011: Thailand
Mobile phone services in Thailand can be prepaid The mobile industry consists of three major ser- or postpaid; about 90 percent of the phones with vice providers—AIS, DTAC, and TrueMove— SIM cards are prepaid.3 Although the MNOs have and a few small providers: Hutch, Thai Mobile, invested in 3G infrastructure, they are not yet able and TOT. In 2008, the three major providers to offer it commercially, and the issuing of 3G owned about 99 percent of the subscriber market licenses has not yet been finalized by the regulator. share, and about 97 percent of the revenue market The biggest obstacle to further mobile growth is share. AIS was the original provider and has led in the lack of 3G spectrum. number of subscribers and revenue. Airtime costs have been similar among the three providers. As of 2010, the average tariff rate ranged from B 0.25–2 3 Information from annual reports of AIS, DTAC, and (US$0.01–US$0.06) per minute, and from B 1–2 True Corporation. (US$0.03–US$0.06) per text message. User Survey Findings4
small sample of Thai citizens in both DTAC has more than 1.4 million mobile banking urban and semi-urban areas were sur- subscribers through its ATM SIM service. veyed on the use and potential of m-money in general and specifically The survey consisted of face-to-face interviews A 1 with about 200 respondents from Bangkok and about m-money services in Thailand, such as TrueMoney’s m-money product and Advanced surrounding semi-urban and remote areas, which MPay. The survey is not intended to be a statisti- included Nakornprathom, Supanburi, Amnacha- cally representative sample of m-money users and roen, and Prae. One hundred customers using potential users, but rather to provide an overview m-money services were identified and randomly of people’s attitudes, preferences, issues, and rec- chosen for the survey. A further 100 people, who ommendations regarding m-money services. did not use m-money services but used mobile phones, were selected for a parallel nonuser survey. As noted in the previous chapter, three major Both groups were asked structured and semistruc- m-money service providers (AIS, DTAC, and tured questions on topics including basic financial TrueMove) share most of the market. AIS and literacy, use of finances, and preferences regarding TrueMoney (the financial services sister of True- m-money. Move) provide an e-wallet service. At the begin- ning of 2010, about 6 million of the 15 million A sample of 30 agents, typically from small and TrueMove subscribers had an e-wallet account.2 medium-size enterprises that work on behalf of Approximately 400,000–500,000 AIS subscrib- the m-money service providers, were identified ers have an MPay e-wallet account; however, only and polled in the survey areas. Their survey con- about 100,000 of them are individual active users.3 sisted of more open-ended questions designed to broadly identify key issues and recommendations.
User Survey 1 For the purposes of the survey, the definition of m-money is as follows: A financial transaction or infor- The sociodemographic profile of the Thai respon- mation request via a mobile phone and usually involv- dents is shown in figure 4.1. ing a network of agents. Excluded in this definition is Internet or voice banking using a mobile phone. The m-money user respondents can be summa- 2 Interview with Piyachart Ratanaprasartporn, True- rized as follows: Money general manager, January 28, 2010. Slightly more are female. 3 Interview with Supreecha Limpikanjanakowit, Advanced MPay managing director, February 25, 2010. Almost 40 percent are 26 years or younger.
19 20 IFC Mobile Money Study 2011: Thailand
Figure 4.1 Socioeconomic Characteristics of Mobile Money Users and Nonusers
a. Gender b. Marital status
Married Male
Users Divorced Nonusers
Female Single
0 20 40 60 80 100 0 20 40 60 80 100 Percentage of respondents Percentage of respondents c. Age d. Occupation
Public service <16
Executive 16–25 Professional 26–45 Employee
46–60 Self-employed
>61 Student
0 20 40 60 80 100 0 20 40 60 80 100 Percentage of respondents Percentage of respondents e. Highest level of education completed f. Average monthly income
Primary
Middle B 10,000–B 30,000 school (US$316–US$947)
High B 30,001–B 50,000 school (US$948–US$1,578)
Technical B 50,001–B 70,000 college (US$1,578–US$2,209)
University B 70,001–B 100,000 degree (US$2,209–US$3,156) 0 20 40 60 80 100 0 20 40 60 80 100 Percentage of respondents Percentage of respondents
Source: IFC Mobile Money Study 2011. 4. User Survey Findings 21
About 80 percent are single. Figure 4.3 Mobile Money Services Used About 80 percent have a university degree (and slightly over 30 percent are still students). Bill payment Employees make up the other large occupa- Airtime reload tional group of m-money users (slightly more than 30 percent). Purchasing
Slightly less than 70 percent have income of Funds transfer US$900 per month or less. Other In Thailand, m-money users are mostly young 010203040 and well educated, but still in the lower-income Percentage of respondents groups. Source: IFC Mobile Money Study 2011.
Mobile Money Use For 40 percent of Thailand’s m-money users, the in Thailand, with an equal split between users service is separate from and not linked to their and nonusers (figure 4.4). Smartphones have a bank account. It seems that there is little integra- fairly strong representation, though 3G has yet tion with the formal banking system. TrueMoney to launch in Thailand, so use of smartphones needs to integrate with the existing financial is limited to their Wi-Fi capability. As in other system to add subscribers. Figure 4.2 provides a countries in the study, a range of phone brands breakdown of m-money services for which users are in use. had signed up. Figure 4.4 Mobile Phone Brand Used Figure 4.2 Mobile Banking Service Provider Nokia Samsung SCB mPAY 14% 10% Apple BlackBerry LG TrueMoney H2O Users 32% Nonusers ATM SIM G-Net 44% HTC Other 0204060 Source: IFC Mobile Money Study 2011. Percentage of respondents
Source: IFC Mobile Money Study 2011. The two most frequently used m-money appli- cations, with over 30 percent each, are airtime recharge and fund transfers (figure 4.3). Financial Access
Mobile Phone Use Figure 4.5 illustrates the predominance of ATMs in Thailand and the fact that ATMs continue to As in most other countries in the study, Nokia be a major focus for banks. Most (97 percent) is by far the predominant brand of phone used users use ATMs to withdraw cash, making the 22 IFC Mobile Money Study 2011: Thailand
no cost (excluding the cost of getting to the ATM Figure 4.5 Cash Withdrawal Sources Used itself, and ATMs are fairly well distributed). Most Frequently Emphasizing the ubiquity of ATMs, it takes Percentage of respondents 80 percent of m-money users less than 10 min- 100 Users Nonusers utes to get to an ATM, compared with 87 percent 80 of nonusers (figure 4.7). Of course, these statis- tics will change outside of urban and semi-urban 60 areas, but the continued expansion of ATMs by 40 the banks means that even rural areas are likely to have reasonable access to ATMs. 20
0 Figure 4.7 Travel Time to Nearest Bank or ATM ATM Bank teller Do not Thailand Check withdraw post Percentage of respondents Source: IFC Mobile Money Study 2011. 100
use of agents virtually insignificant. ATMs have, 80 to a major extent, replaced the requirement for Users Nonusers m-money agents in other jurisdictions. Similarly, 60 90 percent of nonusers made use of ATMs to withdraw cash. 40 Bank ATM On average, the amount of cash withdrawn 20 Bank was fairly large, between B 1,001 and B 3,000 Bank Bank ATM ATM (US$32–US$95) (figure 4.6). ATMs were also 0 used frequently for smaller amounts of between <10 min. 10–30 min. 30–60 min. >60 min. B 501 and B 1,000 (US$16–US$32); 29 percent Source: IFC Mobile Money Study 2011. of users withdrew in this range. Cash withdraw- als from ATMs are free, so small withdrawals have About 12 percent of users stated that they used a bank teller, compared with 18 percent of non- users. About 18 percent of users used their mobile Figure 4.6 Typical Cash Withdrawal Amounts phone to transfer money, but the overwhelming
Percentage of respondents number of respondents—54 percent of users and 68 percent of nonusers—used ATMs to transfer 40 Users Nonusers money. Products such as DTAC’s ATM SIM have 30 taken advantage of the high ATM usage by adding the convenience of P2P transfers via mobile 20 phone. Interestingly, for nonusers, the Internet
10 was the third most popular mechanism to transfer money (figure 4.8). 0 None B 5,000 In terms of awareness, although TrueMoney has (
Figure 4.8 Typical Methods of Money Transfer Figure 4.9 Preferred Source of Information on Mobile Banking Services Percentage of respondents 80 Percentage of respondents Users Nonusers 50 60 40 Users Nonusers 40 30
20 20 10 0 Bank M- ATM Online/ Thai Other 0 teller money Internet post Mass Agent Directly from SMS Friends/ Other media bank family Source: IFC Mobile Money Study 2011. Source: IFC Mobile Money Study 2011.
that emerges from this analysis is that TrueMoney Trust in Financial Sector has substantially more work to do in making Thais have a high level of confidence in their bank- people aware of its services. ing sector:4 96 percent of users and 97 percent of A significantly higher percentage of users (30 per- nonusers stated that they were “confident” to “most cent) preferred communications about m-money confident” in the banking sector (figure 10a). services via text messages, compared with only In contrast, banking services offered by mobile 5 percent of nonusers (figure 4.9). Users were operators were clearly not as trusted, with users more comfortable than nonusers in learning about and nonusers stating that they were “confident” new services through their mobile phones. There is an important marketing role for mass advertis- ing, with 47 percent of nonusers choosing it as 4 In the context of this study, the words “trust” and their preferred method of communication. “confidence” are used interchangeably.
Figure 4.10 Level of Confidence in Banking Sector
a. Con dence in banks b. Con dence in m-banking provided by MNOs
Percentage of respondents Percentage of respondents 100 100
80 80 Most confident
60 Quite confident 60
Confident 40 40 Less confident
20 Not confident 20
0 0 Users Nonusers Users Nonusers
Source: IFC Mobile Money Study 2011. 24 IFC Mobile Money Study 2011: Thailand
at 34 percent and 43 percent, respectively. Com- There is a strong demand for services such as bining the “confident” and “most confident” salary deposits, insurance, and goods purchasing responses, however, accounts for 85 percent of using m-money. Of those users who indicated a users and 72 percent of nonusers. Banks are the “high” to “very high” interest, 50 percent wanted preferred mechanism, but overall trust in both to purchase goods using m-money. As a qualifier, banks and MNOs is very high (figure 10b). nearly 70 percent stated that they would like to see “other” kinds of m-money services (figure 4.12a). Benefits of Mobile Money What these other services might be would need further investigation, probably using focus groups. More than 70 percent of users strongly agreed that the main benefit of m-money is its convenience Given Thailand’s extensive financial infrastruc- (time saving). Another major benefit is the imme- ture, it is not surprising that many nonuser diacy of transfer, with 60 percent of users strongly respondents did not see the full potential of what agreeing. Cost savings was chosen as a benefit by could be offered on an m-money platform. The nearly 30 percent of users, probably because bill primary interest was in airtime recharges and bal- payments are not free, and TrueMoney (for exam- ance inquiries (figure 4.12b). ple) offers bill payments at a lower cost than banks (figure 4.11a). Agent Survey Nonusers have a slightly different profile as to the The summary of agent survey responses is based on benefit of m-money. They perceived the value of a small sample of third-party TrueMoney agents. 24-hour access and convenience (time saving). A The survey was intended to provide an overview of much lower percentage saw a cost-savings bene- their business and motivations, and to identify issues fit (figure 4.11b). Both users and nonusers see the regarding m-money services, such as their satisfac- value in m-money, and this perception can poten- tion with the business and their business models. tially be exploited to roll out m-money more Given the small sample size, the summary of issues aggressively in Thailand. is qualitative, based on open-ended questions.
Figure 4.11 Respondent Rankings of Benefits of Mobile Banking
a. Users b. Nonusers
Percentage of respondents Percentage of respondents 100 100
80 80 Highest
60 High 60
Neutral 40 40 Low
20 Lowest 20
0 0 Cost Time 24-hour Physical Immediacy Other Cost Time 24-hour Physical Immediacy Other saving saving access security of fund saving saving access security of fund transfer transfer
Source: IFC Mobile Money Study 2011. 4. User Survey Findings 25
Figure 4.12 Respondent Level of Interest in Various Mobile Money Services
a. Users b. Nonusers
Percentage of respondents Percentage of respondents 100 100
80 80 Highest
60 High 60
Neutral 40 40 Low
20 Lowest 20
0 0 Purchasing Salary Micro- Health Other Airtime Balance Bill Fund deposit loans insurance recharge inquiry payment transfer
Source: IFC Mobile Money Study 2011.
Agent Profile The average number of people employed in agent businesses was two, with a range of from Of the agents surveyed, 44 percent identified 1–20 employees. About 38 percent of the agents themselves as entrepreneurs employed in the pri- were sole proprietorships, with another 30 percent vate sector or in a mobile phone shop. Twenty- having a single employee. nine percent were located in grocery stores, and about 10 percent each were in copy shops and Annual reported sales of the businesses ranged book rental businesses. Another 9 percent were in from less than US$15,427 to more than post offices (table 4.1). US$107,990 per year. About 42 percent of the agents reported sales in the lowest category, with about 33 percent reporting sales of US$92,563 or more, and 24 percent reporting sales in the high- Table 4.1 Distribution of Surveyed Third-Party Agents by Type of Business est category (figure 4.13).
Type of business % The percentage of time spent on m-money aspects of the business was typically 10 percent or less Corporate, private sector, or government employee 35 for about 35 percent of the agents, and 50 per- Mobile phone shop, mobile phone agent 9 cent or more for about 39 percent of the agents Grocery store 29 (figure 4.14).
Printing/copying shop 9 Agent Motivations Post office 9 About 30 percent of the agents had been in busi- Book rental shop 3 ness for at least two years, and another 30 per- Other business owner 6 cent for five years or more. The top reasons cited
Source: IFC Mobile Money Study 2011. for their participation in the m-money business included recommendations to start a business by 26 IFC Mobile Money Study 2011: Thailand
Figure 4.13 Annual Sales of Respondent Figure 4.15 Agents’ Views on Why Clients Businesses (US$) Choose Mobile Money Services over Other Options No answer Percentage of respondents <15,427 60 15,428–30,854 50 30,855–46,281 40 46,282–61,708 30 61,709–77,135 20 77,136–92,562 10 92,563–107,989 0 >107,989 Convenient Connection, my Fast No minimum business reputation limit 010203040 50 Source: IFC Mobile Money Study 2011. Percentage of respondents
Source: IFC Mobile Money Study 2011. The agents’ chief suggestions for ways to improve the business pointed to the need to diversify yhr products sold, increase profitd on current activi- Figure 4.14 Percentage of Staff Time Serving Mobile Money Customers ties, and maintain customer convenience. About 40 percent indicated that their business needed to Percentage of respondents diversify the number of products sold aside from 40 the typically available m-money transactions. In fact, a primary complaint from 20 percent of 30 respondents was that customers were unable to conduct a variety of utility bill payment transac- 20 tions.
10 A further 20 percent indicated that technical problems such as system crashes were a main con- 0 cern, especially if the convenience aspect of the 0.1–10 11–20 21–30 31–40 41–50 51–60 >60 customer service was degraded. Requirements Percentage of time to make frequent visits to their bank branches Source: IFC Mobile Money Study 2011. for deposits and withdrawals were considered a downside to the agent business by about 11 per- cent of respondents. friends, customers, or True staff (36 percent); abil- ity to provide added convenience for their custom- Agent Training and Marketing ers (about 30 percent); and the need to provide Support additional income for their business (21 percent). The majority of the TrueMoney agents (91 per- Respondents overwhelmingly indicated that con- cent) indicated that they had no training in venience and reliability were key reasons people the features of the products aside from a train- conducted m-money transactions at their busi- ing manual and support materials supplied by nesses. Customer trust in the agents played a True to about 75 percent of respondents. About strong factor, with 29 percent of the agents polled 52 percent of the agents suggested this level of believing that people did business with them training and support was adequate, with 30 per- because they trusted them (figure 4.15). cent suggesting that their knowledge levels were 4. User Survey Findings 27
adequately updated and maintained. However, at least 48 percent felt the training was inadequate, Figure 4.17 Training Agents Considered Most Useful and 70 percent felt knowledge levels were not maintained. Percentage of respondents 80 As Safaricom has emphasized, agents are the touch points to the customer, thus training agents is 60 critical (Jenkins 2009). If TrueMoney’s range of products is to be expanded, as is suggested in this 40 report, that one of the major initiatives will need 20 to be training.
0 Marketing materials provided included small Sales/ Business Inventory Other Staff advertisements (stickers, signage, and infor- management accounting control management skills management mation on current promotions). A substan- tial number of respondents (27 percent) said Source: IFC Mobile Money Study 2011. they had not received any marketing materials (figure 4.16). Agent Transactions and Revenues
Figure 4.16 Marketing Materials Provided to The main transactions conducted via agents were Agents by Service Provider mobile airtime recharge, bill payments, and—in some cases—fund transfers. The percentage of Percentage of respondents overall sales attributed to the use of m-money ser- 30 vices is shown in figure 4.18.
Thirty-four percent of the surveyed agents said 20 that the revenue from m-money services as a per- centage of total sales was 1–5 percent. M-money 10 service revenues of 6–25 percent of total sales were indicated by another 36 percent of agents. For about 15 percent of agents, m-money ser- 0 None Decorations/ Signs/ Promo- Brochures/ Manual Software vices made up 50–100 percent of their sales. For stickers billboards tions bags
Source: IFC Mobile Money Study 2011. Figure 4.18 Revenue from Mobile Money as Percentage of Total Sales Agents suggested that the most useful training would be in sales and management skills, small Percentage of respondents 40 business accounting, inventory control, and staff
management. Most (68 percent) believed sales 30 and management skills would be the most useful. Since most agents were small businessmen, the 20 lack of formal sales and management training is to be expected (figure 4.17). 10
About 20 percent of the agents noted that, since 0 1%– 6%– 11%– 26%– 51%– Don’t the agent business was not their primary business, 5% 10% 25% 50% 100% know attention to m-money issues might be considered Source: IFC Mobile Money Study 2011. less important than their other responsibilities. the majority of agents (58 percent), m-money accounted for less than 10 percent of their total Figure 4.20 Required Minimum Deposit to Service Provider Account revenue. This low percentage might explain why agents want to expand the range of m-money Percentage of respondents products available. 40
For mobile phone recharge transactions, the 30 typical commission charged by agents was 3.0– 3.5 percent of the transaction amount. For bill 20 payments, the typical transaction fee was approxi- mately US$0.19 per bill. 10
Payment of fees and commissions by the m-money 0 service provider to the agent is typically done None US$0– US$78– US$155– US$232– >US$309 immediately or on a daily basis (figure 4.19). US$77 US$154 US$231 US$309 Source: IFC Mobile Money Study 2011.
Figure 4.19 Frequency of Compensation by Service Provider About 30 percent of agents said they had no cash float requirement, and another 35 percent indi- cated requirements for US$31 or less. Some agents Real time 41% (22 percent), however, had cash float requirements in excess of US$77 (figure 4.21). Don’t Weekly 3% know 3% Monthly Figure 4.21 Cash Float Requirements 9% Percentage of respondents Daily 25 44% 20
Source: IFC Mobile Money Study 2011. 15
10
Agent Costs 5
The cost of business start-up for the agents was 0 generally quite low. About 60 percent of agents US$1– US$16– US$32– US$47– US$63– >US$77 US$15 US$31 US$46 US$62 US$77 indicated they spent nothing to start up their busi- ness; another 24 percent estimated that US$154 Source: IFC Mobile Money Study 2011. was required for start-up. In most cases, start-up was funded from the agent’s savings, with only Constraints to managing agent liquidity include about 6 percent of the agents requiring a loan for the time required for depositing and obtain- start-up. ing cash from a bank. Although 88 percent of Agents were required to maintain a minimum respondents had no cash limit requirement for deposit in an account with the service provider. which bank deposits had to be conducted, about For about 35 percent of agents, this represented 44 percent conducted daily banking transac- a cost between US$78 and US$154. Another tions. Another 30 percent traveled to the bank 24 percent were required to maintain deposits of on a weekly basis. For about 70 percent, these US$232 or more (figure 4.20). trips took 10 minutes or less. About 20 percent 4. User Survey Findings 29
of respondents cited time commitments of about diversify into additional products, such as micro- 30 minutes (figure 4.22). loans. Agents indicated that even within the lim- ited set of transactions they conduct now, there is Figure 4.22 Frequency of Trips to the Bank room for improvement. For example, a number of utility bill payments might be made via the ser- Percentage of respondents vice. Fund transfers and product purchases might 50 be used more if there were more customer service 40 points where they could be accessed by customers.
30 Agents noted that building consumer knowledge and trust in the service was a key factor in busi- 20 ness success. Survey results indicated a need for 10 improved marketing of the services, but some agents also made the point that an important suc- 0 <1/day 1/day 1/week 1/month >1/month cess factor in the m-money aspect of their business was trust. The trust relationship had much to do Source: IFC Mobile Money Study 2011. with how long the business had been operating in the community and its track record of dealing Adequacy of Customer Support fairly with people. But trust is a commitment that has to be promoted and, ultimately, backed by the Overall, agents felt customer support by the ser- service provider. As one agent noted, “Advertise- vice provider was sufficient in case of any prob- ments and promotions by service providers need lems, with the majority responding that if any to include information on how they uphold the issues or concerns came up regarding the service, safety and reliability aspects of the service.” they could readily get support via the call center support line. Another concern involved the reliability, speed, and interoperability of the technologies. Agents Key Challenges reported limitations, such as frequent system crashes, inability to reverse some transactions (e.g., The main challenge, as indicated by a major- Advanced MPay top-ups), and lack of interoper- ity of agents, was the need to increase the profit- ability between systems (e.g., TrueMoney and ability of the service. It is hard for the agents to Advanced MPay). With other payment options turn a significant profit when they are conduct- available, the service must meet customer expec- ing only a few types of transactions, such as air- tations of speed and reliability, or customers will time recharge, bill payments, and fund transfers. turn to conventional payment methods, such as Most agents expressed the need for the service to cash or debit cards. 5Business Models
he three major mobile service providers in MPay account. However, only about 100,000 of Thailand—AIS, DTAC, and TrueMove— these accounts are active.2 DTAC has more than have been offering various types of m-money 1.4 million mobile banking subscribers through Tservices. AIS started its m-money business ATM SIM. At the beginning of 2010, interoper- (Advanced MPay) in late 2004. DTAC began by ability between Advanced MPay and TrueMoney offering an e-wallet, but in 2008 evolved its offering was not possible unless funds were transferred to to a wallet linked to a bank account held by its part- a bank account and then paid through the inter- ner, K-Bank. True Corporation (the parent com- bank system. pany of TrueMove) launched its “eWallet” through a subsidiary called TrueMoney in 2005. TrueMoney Thailand demonstrates three business models, TrueMoney is a subsidiary of True Corporation, each of which has become relatively successful a conglomerate with interests in mobile and fixed in terms of the business objectives of the owners, line phones, pay TV, broadband Internet, radio, although they all continue to search for ways to coffee shops, and online gaming. TrueMoney is decrease costs and attract new subscribers. The offered through its sister MNO company, True- imminent introduction of phone number porta- Move. TrueMoney was introduced to enable cus- bility has given each of the MNOs an incentive to tomers to top up many prepaid services and to pay introduce value-added services to reduce “churn,” their various True Corporation bills more easily. or turnover of customers. Table 5.1 summarizes Because True Corporation could guarantee a cer- each of the business models, which are then dis- tain volume of transactions, it was able to get cussed in more detail; table 5.3 at the end of this retailers to offer top-up and True bill payment ser- chapter captures these details. vices. The TrueMoney eWallet can be topped up by a bank transfer (from linked accounts at four AIS and TrueMoney provide a mobile wallet solu- banks), at the ATMs of four banks, or by using a tion called eWallet. At the beginning of 2010, universal scratch card called the TrueMoney Cash about 6 million out of 15 million TrueMove Card.3 subscribers had an eWallet account1—up from 837,000 in the third quarter of 2008. Approxi- 2 mately 600,000 AIS subscribers have an Advanced Interview with Supreecha Limpikanjanakowit, Advanced MPay managing director, February 25, 2010. 3 A scratch card is a card with a prepaid value and a PIN. 1 Interview with Piyachart Ratanaprasartporn, True- To view the PIN, the user must scratch the masking. It is Money general manager, January 28, 2010. usually used to pay for airtime.
30 5. Business Models 31
Table 5.1 Business Models of Three Major Mobile Money Providers in Thailand
Element TrueMoney (True Corporation) Advanced MPay (AIS) ATM SIM (DTAC–K-Bank)
Business MNO-driven e-wallet MNO-driven e-wallet Bank and MNO alliance structure
Strategy Bill payments for True group and non- B2B transfers for airtime resellers Growth from K-Bank customer base True companies, especially utility bills, for MNO airtime top-up, selling virtual goods E-transaction banking for bank
Key e-Wallet developed in order to cater Focus on B2B; training network of AIS Shared costs and risks success to the needs of companies within the resellers (now expanded to include Access to ATM infrastructure for factors True group other businesses); high-margin cash-out Reduce airtime sales commission business, few competitors in the B2B Little need for cash-out points as space focus on bill payments, so merchant liquidity is not an issue Easy access for merchants to bank accounts and banking infrastructure Minimize fixed costs and share revenue
Focus Segmentation for group company Segmentation primarily targeting Segmentation targeting bank segment billers airtime merchants customers looking for greater Cost leadership for postpaid bill convenience payers Multiple services provided at TMX location (a one-stop shop)
Source: IFC Mobile Money Study 2011.
TrueMoney cash cards are sold through the airtime TruePartners—franchisees of TrueMove, reseller network and some retail stores. Agents at which offer TrueMove services as well as bill the stores receive a lower commission for these payments and also sell TrueMoney cash cards cards than for a normal airtime scratch card, but TMX—payment counters within existing retail they sell higher volumes since the universal scratch stores such as CP Freshmart where True bills and card can be used to top up many prepaid services, non-True group bills can be paid electronically. such as airtime, online games, Wi-Fi, prepaid Internet, voice over Internet Protocol (VOIP), TrueMoney has focused on expanding TMX buy electronic content, or pay an electronic com- across Thailand because these have the lowest ini- merce merchant. It was decided to introduce the tial investment. Unlike a normal payment counter TrueMoney cash card for top-up services since it service, a TMX dealer does not have to manage its would already be familiar to airtime sellers and own account (eWallet), because all bill payments prepaid airtime buyers. Customers can also top up and airtime top-ups are deducted from the TMX eWallet from a credit card, bank account, or cash wallet automatically and immediately. Because all at a True payment counter. TrueMoney has three transactions are done in real time, there is no delay categories of agencies where top-ups can be done in the money settlement or transfer to TrueMoney. and True bills can be paid: Currently, there are three types of TMX: TrueMove stores—full-service retail stores, where all of TrueMove’s services are also offered TMX online, based on PC and high-speed (some, which incorporate a coffee shop, are Internet; transactions are performed on PC via called True Coffee stores) high-speed Internet 32 IFC Mobile Money Study 2011: Thailand
TMX mobile, based on TrueMove mobile net- revenue stream in a competitive mobile market. work; transactions are performed on a mobile Its main challenge was to make m-payments rel- phone via the global system for mobile com- evant and valuable given the widespread banking munications (GSM) network infrastructure. Advanced MPay has 600,000 sub- scribers, 90 percent of whom have used the ser- TMX EDC (electronic data capture), based on vice in the past three months. It needs 5.5 mil- EDC and TrueMove SIM; transactions are per- lion annual transactions to break even. The service formed on an EDC device via the GSM net- offers a choice of channels: short message service work. (SMS), interactive voice response (IVR), Inter- To encourage people to pay their True bills, True net, wireless application protocol (WAP) or Java, bills can be paid at all three categories of agencies but AIS has not used STK (SIM Toolkit) integra- for free. TrueMoney receives a commission from tion because it would be more expensive. It has the billing company for postpaid bills and prepaid about 500 merchants signed up to accept pay- services such as online games. All postpaid bill ment through Advanced MPay. AIS has provided payments (outside True Group) at TMX outlets a dedicated SMS gateway for payments to ensure (e.g., at CP Freshmart) cost about B 10 (US$0.32) greater reliability. compared with bank charges of B 15 (US$0.47) Funds into the e-wallet come from cash, bank or more. accounts, and credit cards. The link to the card TrueMoney recently introduced a contactless pay- and/or account is made on the phone. The max- ment method called Touch SIM, which can be imum balance in the wallet is B 30,000 (about used offline for small-value transactions at mer- US$950), but a merchant can apply for a higher chants with special contactless readers. The Touch balance. This is acceptable to the regulator since SIM can easily be input in a mobile phone like the operator conducts a higher level of customer a normal SIM; however, it is relatively expensive due diligence on these merchants than would (B 300 or about US$10), which has generated be done for a standard account. Micropayments some customer resistance. TrueMoney is currently of less than B 100 (about US$3) are taken from bearing some of the cost, allowing it to sell for the e-wallet balance, but payments of more than B 149 (about US$5). B 100 can be pulled from a credit card.
Free full-day training is available for merchants While Advanced MPay has a user base of 600,000, twice a month in Bangkok. The introductory its core business, which drives profitability, is now training pack includes a CD with all the product business-to-business transfers. This service was and process information. Support is also provided established mainly to pay the 200,000 AIS air- through a special line for merchants at the True- time resellers efficiently and for them to buy air- Move call center. time stocks,4 but it has now expanded to include other businesses. Because it does not require mass Advanced MPay marketing, this model has lower marketing costs as well as higher transaction values. About 40 per- Advanced MPay is a subsidiary of AIS, the largest cent of the business is done around metro Bang- mobile network in Thailand. AIS is now owned kok. by the Singapore Telecom (Singtel) group which includes MNOs in Bangladesh, India, Pakistan, AIS places greater emphasis on access to cash and the Philippines. than does TrueMoney, and offers 10,000 outlets where cash can be withdrawn. The fee is B 20 Unlike TrueMoney, Advanced MPay is not intended to make efficient bill payments to sister 4 companies, since it is not a conglomerate. Rather, A stock of prepaid values for airtime can be held in physical scratch cards or as virtual value stored in an AIS originally saw m-money as an additional account. 5. Business Models 33
(US$0.63). There is a maximum withdrawal of In 2008, DTAC and K-Bank introduced ATM B 5,000 (about US$160); the average withdrawal SIM, which enables mobile phones to conduct most is B 1,000 (about US$32). Originally this service ATM functions such as checking account balances, was offered so customers could empty and close transferring funds to other bank accounts, paying their accounts, but AIS now sees an opportunity utility companies, and refilling mobile phone cred- to offer P2P remittances and has found no resis- its. All subscribers to the ATM SIM are required tance from merchants in so doing. to have an account with K-Bank. Customers are charged a small fee over the normal ATM ser- DTAC and K-Bank vice rates.5 The introduction of ATM SIM greatly increased the number and value of mobile banking DTAC is in partnership with K-Bank, one of the transactions. According to the Bank of Thailand, few banks that have entered the m-money space the volume of m-banking transactions increased aggressively. K-Bank’s strategic objectives are to from 359,407 in 2007 to 4,670,377 in 2008. The add a level of convenience for its 7 million custom- annual value of transactions also increased, rising ers and to migrate all their transactions—including from B 336 million (about US$10.6 million) in m-payments—to e-banking to reduce infrastruc- 2007 to B 25,218 million (about US$796 million) ture costs and free staff for other pursuits. in 2008. Table 5.2 shows m-banking statistics pub- The objectives of DTAC are to increase its share lished by the Bank of Thailand. of K-Bank’s customer base (30–40 percent of the DTAC tried to go on its own prior to partner- subscribers to the joint service are new to DTAC), ing with K-Bank. In one province, it piloted a to reduce churn, and to increase its SMS revenue model that allowed customers to use their mobile and airtime sales. phones to deposit and withdraw cash and make K-Bank has 1.4 million m-banking subscrib- payments through its agents. However, distrust ers and 600,000 Internet banking subscribers. It of mobile operators (as compared with banks), offers three options: a lack of trust in agents, and the extensive bank branch and post office networks kept it from gain- SMS banking, which can be used for mobile ing acceptance among subscribers. A bank brand top-up seems to give customers confidence in the security ATM SIM—menu and ATM service (more of the system. The bank has indeed put a great than a million subscribers, but probably deal of emphasis on security, requiring links to 10 percent of these are active users) a bank account, the use of a one-time password, WAP based—handset dependent (100,000 5 users); K-Bank calls this “real m-banking” as In 2010, each transaction, including balance inqui- ries, cost B 2 (US$0.06). The first five transactions of opposed to putting Internet banking on the each month are free of charge. There are eight transac- phone. tions per month on average.
Table 5.2 Growth in Mobile Banking
Factor 2004 2005 2006 2007 2008 2009
Number of users 18,312 85,565 133,419 168,434 232,758 257,677
Volume of transactions 22,704 329,769 355,048 359,407 4,670,377 11,246,192
Value of transactions in million B (US$) 745 (24) 622 (20) 392 (12) 336 (11) 25,218 (796) 63,603 (2,007)
Source: Bank of Thailand 2009b. Note: Data for 2009 are preliminary. 34 IFC Mobile Money Study 2011: Thailand
and activation at an ATM. An initial face-to-face classes, an image reenforced by advertising. The encounter with someone who looks professional ATM SIM launch required new images that and trustworthy is also important. DTAC and emphasized the convenience to a younger and K-Bank’s main expenses have been for communi- less-wealthy market segment. New subscrib- cations and face-to-face time with new custom- ers were attracted by encouraging viral market- ers. The bankers believe that the cost of customer ing in a “friend gets friend” campaign. K-Bank is acquisition against future income would be con- focused on increasing its automated transactions sidered high if it were not part of a broader busi- and perceives m-banking as a strand in this strat- ness strategy. egy, allowing it to offer customers multiple elec- K-Bank’s target market for m-banking is work- tronic channels including ATMs, IVR, and Inter- ers whose earnings are less than B 20,000 (about net, thus reducing the number of cash and check US$630) per month and who are probably receiv- transactions and the costs of the banking infra- ing a salary from their first office job; or alterna- structure. Many of the 600,000 Internet banking tively, factory workers who want to avoid lines at users tend to be sole proprietors. This e-migration ATMs. They see a key offering as the ability to top strategy has so far accounted for 81 percent of the up mobile accounts; thus, it is a problem that the banking transactions through electronic channels. product only allows top-ups from one operator. There is no exclusivity between the bank and the As indicated by local survey respondents, mobile MNO; at some stage, it will be in the interest of airtime top-ups is the second most popular trans- the bank to access clients of other MNOs and for action after fund transfers. the MNO to be able to target customers of other Prior to its launch, m-banking was seen as a prod- banks. It is hoped that the Bank of Thailand will uct targeted at the professional and managerial encourage common standards and cooperation. 5. Business Models 35
Table 5.3 Detailed Business Model Comparison
Element TrueMoney (True Corporation) Advanced MPay (AIS) ATM SIM (DTAC–K-Bank)
Objectives Ensure profitability and pass off fixed costs Profitability as stand-alone (although there Bank-led model with K-Bank—provide to merchants is some cross-subsidization between AIS channel and settlement, part of and Advanced MPay, e.g., airtime) e-migration strategy Positive margin in 2009, break even Attracting new MNO customers from bank after 4 years, on schedule for 6.5 million customer base (30–40%) or primary SIM transactions in March 2010 from existing customers with multiple SIMs
Revenue Bill payments B 10 (US$0.32) for postpaid Cash withdrawal and transfer back B 2 (US$0.06) per transaction after 5 free streams bills, e.g., utility (although can be reduced to bank account B 20 (US$0.63) for and an average of 8 SMS text messages to B 5 (US$0.16) through promotions); any channels withdrawal from ATM or per month, so average income per month True Bills free to customer branch B 20 (US$0.63), shared between per client is B 6 (US$19) True revenue from customer transaction merchants and Advanced MPay Bill payments cost B 5 (US$0.16) fee, commission from bill issuer and Bill payments B 10–15 (US$0.32– prepaid service companies US$0.47) Low interest rate so little earned on 80–85% of revenues from B2B business, float of average B 200 million (about 200,000-strong network of B2B users US$6.3 million) Outsourced adding bill payments to a B 1.5 billion (about US$47.3 million) third party revenue; net profit is B 30 million (about US$947,000)
Costs Commission paid in real time to merchants Marketing budget was B 50 million (about System cost B 10 million (about Merchant training—now only in Bangkok, US$1.6 million) but now reduced US$316,000) full-day session is focused on product 40 million SMS text messages per month 100 people marketing features (Advanced MPay absorbs these costs) New SIM B 20 (US$0.63) Special line at call center for TMX Investment in system and building merchants modules MPay has 29 staffers, who mainly handle settlement Agent network managed by AIS
Transac- Touch wallet—offline for small value E-wallet topped up from cash, bank P2P tions transactions account—maximum balance B 30,000 DTAC top-up Online wallet—TrueMoney (about US$950) or can apply for higher Merchants for cash top-ups, bill payments, balance (e.g., merchant) buy games Micropayments of less than B 100 (about Internet payments—to avoid using credit US$3) from e-Wallet balance card online Payment of >B 100 (about US$3) can be Cash-out only at True’s own shops pulled from credit card or bank account 10% transaction charge to cash-out; Link to card or account done on merchants do not like paying out cash application at ATM Cash-in from linked bank account or credit 500 bill pay merchants card or electronic transfer from TMX agent Cash-out up to B 5,000 (about US$160)— or buying cash card average B 1,000 (about US$32) (initially Cash card top-up 80% of cash-in channel offered so clients could close accounts) Pay on Internet with one-time password on mobile phone P2P to any operator client SMS identifier—one-time PIN, sender gives ID number of receiver, mobile phone number, and PIN Payments at vending machine
Target Anyone who pays a bill and/or tops up Merchants for buying stock of SIMS, Factory workers to avoid queues, customer market/ prepaid services especially online games airtime, etc. base of K-bank, first-time salary earners demand Early adopters are 20- to 35-year-olds, university students, first-time workers Primary market is B2B; started as mechanism to lower costs to airtime merchant network 36 IFC Mobile Money Study 2011: Thailand
Element TrueMoney (True Corporation) Advanced MPay (AIS) ATM SIM (DTAC–K-Bank)
Merchants Pay B 19,990 (about US$630) for TMX 10,000 cash-out merchants DTAC outlets, access to K-Bank ATMs but EDC if no PC, B 1,990 (about US$63) for Merchants share in B 20 (US$0.63) no strategy to use third parties TMX online one-time license, B 599 (about withdrawal fee paid next day US$19) for TMX mobile version Less than 3,000–4,000 transactions per Own shops—130 month True partners/franchises—800 Average cash-out payment is B 1,000, TMX—shops with TMX payment service (about US$32) with a max limit of B 5,000 (level one distributors = 10–20) (about US$160) Agents buy e-money and are paid commission in real time by True
Users Anyone who pays a bill and/or tops up 90% of registered base of 600,000 had Existing K-Bank customers (including those prepaid services; e.g., young people used service in the last 3 months from other mobile operators) playing online games Not allowed to automatically register AIS Existing DTAC customers customers—need separate registration, PIN Merchants—200,000 do one transaction every 2–3 days (incentivized since it is a free transfer instead of paying bank charges), benefit to AIS regarding administration and reconciliation
Strategy Leverage existing TrueCorp customers by B2B focus; provide efficient money transfer Retention/loyalty program for existing providing an efficient way to pay bills service to businesses customers, acquisition of existing K-Bank Focus on prepaid top-up services customers Not targeting people outside existing ecosystem
Pipeline Move away from TrueMoney cash card Investigating opportunities in several areas: Link to other banks (aside from K-Bank) to cheaper electronic transactions for International remittances through the Pilot cash withdrawals from the ATM non-True group bill payments and money Singtel Southeast Asian network of network transfers sending and receiving countries Expand to remote areas using TMX model Marketing alliances with trusted department stores to increase trust among consumers (in terms of the Advanced MPay brand) Expand into near-field communications, with an eye on transportation, specifically the skytrain and metro system in Bangkok
Registra- TMX must register; entails filling out a Merchants able to raise balance since have Primary (and preferred) registration at tion form detailed know-your-customer requirements K-Bank as part of normal bank registration End users use over-the-air registration by Direct link to Ministry of Interior to verify process entering the 13-digit Thai ID number and ID (24-hour turnaround) Requires new SIM and therefore need to creating a PIN Account opened and can transact before change number or do SIM swap at DTAC confirmation from Ministry of Interior, shop suspended if unusual status from ministry Activation at ATM KPIs in DTAC to sell the KSIM and customer to transact
Marketing Convergence-based cross promotion Spent huge amounts on mass marketing; MNO and bank joint marketing; MNO pays across group companies; e.g., free cable then focused on B2B for new larger SIM required TV if spend at least B 300 (about US$10) Incentives such as getting additional 5 free transactions on airtime top-up through TrueMoney airtime if bought on phone Superdealers promote multipurpose cash Merchant benefit from no bank charges card used for airtime and/or cash top-up for transfer and easy reconciliations
Source: IFC Mobile Money Study 2011. Conclusion6
hailand has three relatively successful M-money has the capability to play a role in m-money operations. The country has a reducing levels of cash, which would significantly high ATM penetration in addition to a benefit the Thai economy. Thailand did a number Tstrong retail network. Both TrueMoney of things right in fostering its m-money market; and AIS have integrated into the retail network, specifically, it particularly 7-Eleven and CP Freshmart. DTAC is the only provider to have integrated fully with a provided an open and welcoming regulatory bank. The banks have concentrated on ATM pen- environment—the Bank of Thailand (the cen- etration to service all segments of Thailand and tral bank) has been open to the use of m-money offer a range of services, including money trans- and has issued regulations to encourage the fers, bill payments, insurance payments, and cash- transition from cash to e-money; in and cash-out. To compete with the banks, par- integrated m-money into the retail network— ticularly with regard to bill payment services, both the ability to make payments and add value to AIS and TrueMoney provide bill payments at a accounts has been heavily integrated into the cheaper rate than the banks and have established existing retail network; payment service dealers in remote areas where there is no bank branch or ATM. lowered the cost of paying bills—to compete against banks and ATM services, m-money With widespread access to ATMs and their range providers have offered bill payments at lower of services, m-money is unlikely to have as dra- cost than the banks; matic an impact on Thai society as M-PESA has had in Kenya. Nevertheless, several opportunities innovated contactless payment systems—True- have been highlighted in this report. Money is experimenting with Touch SIM, a contactless payment system with a radio fre- A key recommendation is that m-money solutions quency identification (RFID) technology that integrate into existing banking infrastructure for can be fit into most mobile phones; and two reasons: integrated m-money with existing mobile Cash is still a significant medium of transac- businesses—m-money providers need to be tion. licensed separately from MNOs, but both AIS The financial infrastructure of ATMs is grow- and TrueMoney have aggressively targeted their ing fast, and ATMs could be an additional own customers to increase their revenues, and agent network for m-money. both companies are profitable.
37 38 IFC Mobile Money Study 2011: Thailand
Another factor that affects m-money, particularly With the 2G license expiring, the major focus of from an MNO perspective, is the combination of the MNOs is now on the 3G spectrum, since this the mobile operator licensing system and the lack might have to replace the revenues earned from of an official 3G spectrum. The licensing regime the existing 2G operations. M-money must there- for mobile operators means that MNOs oper- fore compete for capital against a 3G network roll- ate under a build-operate-transfer model. In the out—a business model that has proven to bring in case of TrueMobile, the license expires in 2013. substantial revenues. Appendix A Fact Sheet and Demand Estimates
Table A.1 Fact Sheet
Country Profile
Population 66.0 milliona Sector shares of GDP
a Geographic area 513,120 sq. km Agri- culture GDP US$263.9 billionb 12%
GDP per capita US$3,940b Services 44% Rural population 64% (42.2 million)c Industry Rural poor 7.5% (4.786 million) 44%
Population below poverty line 13.6% (9.0 million) (calculated; 1998)d
Financial Profile
Number of banks 14e Top ve banks by deposits
Total branches 5,806e Ayudhya f Total correspondent banking 6 (2008) 11% agents Bangkok Bank Number of bank accounts 118 million (2008)f Siam 26% Commercial Banking penetration 59.0% (2008)g; 1,498 19% deposit accounts per 1,000 adultsh Krung Thai h Kasikornbank Number of POS devices 259,567 (2008) ; 393.3 per Bank 20% 100k pop 24% Number of ATMs 34,745 (2008)h; 52.6 per 100k pop
Number of financial cards 61.7 million; 0.93
39 40 IFC Mobile Money Study 2011: Thailand
Financial Profile (continued)
Credit card growth 8.6 million (2004), 13.0 Number of nancial cards million (2008)h; 10.9% (millions) average annual growth 2004–08 26.3 22.4 Debit and ATM card growth 33.8 million (2004), 48.7 million (2008)h; 9.6% 13 average annual growth 2004–08
Remittance flow—inbound 1,898 million (2009)h (United States, Cambodia, Germany) Credit Debit ATM
Remittance flow—outbound Amount not available (China, Use of e-payment channels Nepal, Japan) (transactions per capita)
i Number of microfinance 1,796 (2009) 1260 institutions ATM
Number of microfinance 2.9 million (2009)i institution accounts Mobile phone Internet 4.7 31 2006 2007 2008 Herfindahl-Hirschman Index 2140 (HHI) (banks)
Mobile Profile
Mobile operators 5 Mobile market share
Mobile coverage 97.0%j Hutchison CAT 1% CAT Telecom 1%
Number of mobile subscribers 65.5 million (calculated) TrueMove Mobile penetration 99.3% (calculated) 24% AIS 44% Internet user penetration 23.9% (16.1 million) (2008)k
Broadband penetration 3.0% (2.0 million)l
DTAC Herfindahl-Hirschman Index 3411 30% (HHI) (mobile)
Note: All data are for 2009 unless otherwise stated. — = not available. a. CIA 2010. b. International Monetary Fund, World Economic Outlook Database, April 2010; http://www.imf.org/external/pubs/ft/weo/2010/01/ weodata/weorept.aspx?sy=2008&ey=2015&scsm=1&ssd=1&sort=country&ds=.&br=1&pr1.x=48&pr1.y=7&c=578&s=NGDPD%2CN GDPDPC&grp=0&a=. c. Population Reference Bureau 2008, Data by Geography, Thailand; http://www.prb.org/Datafinder/Geography/Summary. aspx?region=161®ion_type=2. d. United Nations Development Programme, Human Development Report Statistics 2009, http://hdrstats.undp.org/en/indicators/161.html. e. Thailand Development Research Institute, May 2010. f. Bank of Thailand 2009a. Appendix A. Fact Sheet and Demand Estimates 41
g. Honohan 2008. h. CGAP 2009. i. Thailand Cooperative Promotion Department. j. AIS 2010. k. International Telecommunication Union, World Telecom ICT Indicators, http://www.itu.int/ITU-D/icteye/Indicators/Indicators.aspx. l. Phoosuphanusorn 2010.
Table A.2 Demand Estimates
Socioeconomic data
Population (millions) 66a
GDP per capita (US$) 3,940b
Gini index 42.5c
Financial data
Bank accounts (million) 118d
Banking penetration (percent) 80.2e
Number of POS devices 259,567d
POS devices (per million inhabitants) 3,933f
Number of ATMs 34,745d
ATMs (per million inhabitants) 526g
Payment cards (million) 62d
Payment cards (per million inhabitants) 934,848
Mobile data
Mobile operators 5
Mobile penetration (percent) 74.1h
Number of mobile subscribers (million) 68,590,362i
Potential demand
E-payments (per month) 35,000,000j
G2P (transactions per month) 646,800k
Payroll, informal sector (transactions per month) 20,988,000l
P2P (transactions per month) Unknown
Public transport (trips per month) 58,873,333m
Unbanked (persons) 5,869,461n
Utility (payments per month) 13,404,916o a. CIA 2010. 42 IFC Mobile Money Study 2011: Thailand
b. International Monetary Fund, World Economic Outlook Database, April 2010; http://www.imf.org/external/pubs/ft/weo/2010/01/ weodata/weorept.aspx?sy=2008&ey=2015&scsm=1&ssd=1&sort=country&ds=.&br=1&pr1.x=48&pr1.y=7&c=578&s=NGDPD%2CN GDPDPC&grp=0&a=. c. United Nations Development Programme, Human Development Report Statistics 2009, http://hdrstats.undp.org/en/indicators/161.html. d. Bank of Thailand 2009a. e. Bank of Thailand 2010. f. Calculated by dividing population into POS (million). g. Calculated by dividing population into ATMs (million). h. AIS 2010. i. Thailand National Telecommunications Commission 2010, Thailand ICT Info, report list, http://www.ntc.or.th/TTID/. j. Bank of Thailand, http://www.bot.or.th/English/PaymentSystems/OversightOfEmoney/Documents/E-Money_data_eng.xls. k. G2P data and sources: % of population over 65 = 7 (Population Reference Bureau 2008, Data by Geography, Thailand; http://www.prb.org/Datafinder/ Geography/Summary.aspx?region=161®ion_type=2) % of population below the poverty line = 14 (OPHI 2010) G2P payments (B500 program) = 646,800. Calculated by taking percentage of population over 65, multiplied by percentage of population below the poverty line, multiplied by total population (OPHI 2010). l. 58.3 percent of workforce is in the informal sector (UNDP 2010). m. Public transport data: Public transport (month) = 58,873,333 Bus = 585,160,000 Bus, public = 12,067,000 Train = 47,835,000 Underground = 61,418,000 Calculated by adding bus trips (private), bus trips (public), train, and underground, and dividing by 12 months (Thailand Ministry of Transport, http://vigportal.mot.go.th/portal/site/PortalMOTEN/menuitem.fb4c866ede3f942d6a48be80506001ca/). n. Calculated from data from the National Statistical Office of Thailand. o. Calculated from various sources: postpaid subscribers: 7,104,916 (Thailand National Telecommunications Commission, http://www. ntc.or.th/TTID/); cable and satellite TV: 6,300,000 (The Nation 2010). Appendix B Persons Interviewed
Chittiporn Inoue, Vice President, Business Strategy Sakorn Srisawatt, Senior Analyst, Payment Systems and Analysis, Aeon Department, Bank of Thailand
Frederico Gil Sander, Economist, World Bank Sasinan Pantuna, Team Executive, Payment Systems Thailand Department, Bank of Thailand Ian Guy Gillard, Executive Vice President, Technology Division, Bangkok Bank Silawat Santivisat, First Senior Vice President, Retail Business Division, KasikornBank Israbhol Cheawiriyabunya, Deputy Director, TrueMoney Supreecha Limpikanjanakowit, Managing Director, Karen Campbell, Executive Vice President, Product Advanced MPay and Distribution Department, Bangkok Bank Tsuyoshi Nagata, Vice President, Business Kuda Rananand, Division Executive, Payment Development, Aeon Systems Department, Bank of Thailand Udomluk Tantbirojn, First Vice President, Pakorn Pannachet, Senior Vice President Products Consumer Segment, KasikbornBank Division, DTAC Piyachart Rat, General Manager, True Money Arunporn Limskul, Executive Vice President, Division Head, CRM and Electronic Channels, Pongpanu Svetarundra, Director General, Siam Commercial Bank Comptroller General’s Department Ratchada Anantavrasilpa, Financial Sector Sariya Taweesang, Vice President, Team Manager Specialist, World Bank Thailand Electronic Channels, Siam Commercial Bank Roj Dachodomphan, Assistant Vice President, VAS Phusit Kamolsoonthorn, Senior Vice President, GE Marketing Department, DTAC Money
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Photo credits: IFC Photo Library (top); True Money (bottom) 2121 Pennsylvania Avenue, NW Washington, DC 20433 USA www.ifc.org
November 2011